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IRS’s Identity Theft Liaison Pilot Program with Law Enforcement Expands to 50 States

The
IRS announced the expansion of its Law Enforcement
Assistance Program on identity theft to 50 states and the
District of Columbia (IR-2013-34). The expansion was effective
Friday. Under the program, state and local law enforcement
officials with evidence of identity theft involving
fraudulently filed tax returns obtain permission from the
victims to disclose their tax return information.

The IRS will assist law enforcement in locating identity
theft victims and obtaining their consent, which must be
done on a special IRS disclosure form. Law enforcement
representatives can then submit this consent to the IRS
Criminal Investigation Division, along with a copy of the
police report and the Form 14039, Identity Theft
Affidavit, (a form victims file with the IRS) if one is
available. Without the victims’ consent, Sec. 6103 generally
prohibits the IRS from disclosing tax return information to
law enforcement.

The program was rolled out last
April as a pilot program, beginning in Florida, where the
greatest number of identity theft cases occur (see Treasury
Inspector General for Tax Administration Rep’t No. 2012-40-050). The program was expanded
to eight more states in October (Alabama, California,
Georgia, New Jersey, New York, Oklahoma, Pennsylvania, and
Texas). According to Acting Commissioner Steven Miller, the
IRS has been aggressively working on identity theft issues
on multiple fronts. “The pilot expansion will help these
efforts,” Miller said. Law enforcement interested in working
with the IRS should contact a local IRS Criminal
Investigation field office.

The IRS also touted its
success in other identity theft areas, pointing to its
stopping $20 billion in fraudulent refunds and 5 million
suspicious returns in 2012, up from $14 billion and 3
million in 2011. It has resolved more than 200,000 identity
theft cases since the beginning of 2013 and issued 770,000
identity protection personal identification numbers (IP
PINs), a PIN it issues to help protect taxpayers who have
had their identities stolen.

Since October, the IRS
has pursued more than 670 criminal identity theft
investigations and convicted offenders are receiving
sentences averaging four and reaching up to 20 years. In
January, the IRS participated in a coast-to-coast identity
theft enforcement sweep that resulted in 298 indictments,
informations, complaints, and arrests.

State audits of abandoned and unclaimed property (AUP) have exploded in recent years. This report outlines the escheat process, common types of AUP, how different states are handling it and how companies can plan for potential audits and liabilities.

Don’t get lost in the fog of legislative changes, developing tax issues, and newly evolving tax planning strategies. Tax Section membership will help you stay up to date and make your practice more efficient.